TaxTMI 
TaxTMI 
2017 (2) TMI 540
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....Income Tax (Appeals) has erred in confirming the action of Assessing Officer in framing the assessment in gross violation of principles of natural justice and equity by not providing the statement of Shri Mukesh Choksi and other material and records on which reliance has been placed and therefore the same deserves to be quashed. 4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the assessing officer in computing the total income of the Appellant at Rs. 2,78,820/- treating the long term capital gain of Rs. 1,56,7097- as undiscloed income which has been claimed as exempt in the original return of income filed by the Appellant. 5. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in not passing a separate & speaking order disposing of the objections raised against the reassessment proceedings. 6. The learned Commisisoner of Income Tax (Appeals) has erred in confirming the addition of Rs. 1,56,709/- made by the Asessing Officer as alleged undisclosed income of the Appellant. The Appellant craves leave to add, alter, amend or modify any of the grounds appeal on or before the date of he....
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....al gain being exempt u/s 10(38) of the Act and added it back to the income of assessee and assessed the income at Rs. 2,78,815/-. 4. Assessee's appeal before ld. CIT(A) could not bring any relief and the same was dismissed confirming the addition made by ld. Assessing Officer. 5. Aggrieved, assessee is now in appeal before the Tribunal. At the outset ld. Authorised Representative (AR) submitted that the issues raised in this appeal are squarely covered by the decision of the Co-ordinate Bench in the case of Dwani Mahendra Shah vs. ITO, Wd-10(3), in ITA No.922/Ahd/2015 for Asst. Year 2008-09 and others. On going through various grounds raised by assessee and in the light of decision of the Co-ordinate Bench, Ahmedabad in the case of Dhwani Mahendra Shah (supra) we find it pertinent to first adjudicate ground no.3 which reads as follows :- 3. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing Officer in framing the assessment in gross violation of principles of natural justice and equity by not providing the statement of Shri Mukesh Choksi and other material and records on which reliance has been placed and therefore the same deserves ....
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....tement of Mukesh M. Chokshi and opportunity of cross examination. It is undisputed fact revealed from the reassessment order that the request of assessee for providing copy of statement an opportunity to cross examine was declined by the Assessing Officer. Assessee has raised ground no.3 against the action of ld. Assessing Officer for not providing a copy of statement of Mukesh M. chokshi and an opportunity to cross examine him. 10. We further find that similar ground as discussed in above paragraphs came up before the Co-ordinate Bench in the case of Dhwani M. Shah (supra) wherein Co-ordinate Bench relying on the judgment of Hon. Supreme Court in the case of Andaman Timber Industries in Civil Appeal No.4228 of 2006, decided in favour of assessee and allowed the claim of long term capital gain by observing as follows :- 13. Having heard the rival contentions, we have carefully perused the orders of the authorities below. As mentioned elsewhere, we have considered the facts in ITA No.810/Ahd/2015. We find that the assessee had purchased 3000 shares of Telant Info Ltd from M/s. Mahasagar Securities Pvt Ltd on April 2004. The consideration was paid and the payment of consideration i....
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.... amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory price?, remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to crossexamine those dealers and what extraction the appellant wanted fr....
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.... understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Mukesh Choksi may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn. ITA Nos. 810 to 815, 922 to 926/Ahd/2015 Shri Pratik Suryakant Shah & others - Total 11 Appls AYs 2006-07 & 2008-09 18. In the light of the decisions of the Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) and considering the facts in totality, the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account. 19. As mentioned elsewhere and as agreed by the Representatives of both the sides; since the facts are common in all the impugned appeals, a....
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....k of the assessee. In our considered view, in the circumstances, the statement of those persons cannot be read against the assessee. Our above view finds support from the decision of the Hon'ble Jurisdictional High Court in the case of (i) Heirs and Le^l Representatives of Late Laxmanbhai S. Patel Vs. Commissioner of Income Tax (supra) (ii) CIT Vs. Indrajit Singh Suri (supra) (iii) DCIT Vs. Mahendra Ambalal Patel (supra) (iv) CIT Vs. Kantibhai Revidas Patel (supra) In view of the above settled position of law, we find force in the argument of the assessee that the statements of the persons mentioned above are not admissible evidence against the assessee. In absence of these statements, we find that no other material has been brought on record by the Revenue to show that why still the amount in question should be treated as income of the assessee when the assessee furnished all the documents which were available with it to discharge the onus which was upon it u/s. 68 of the Act. In the above circumstances, in our considered view, the addition was made solely based on the inadmissible and unreliable material and therefore addition so made cannot be sustained. We, therefore, ....
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....essee. 6. The attempt made to contend that the burden is upon the assessee to prove the identity of the person, creditworthiness of the person and the genuineness of the transaction are to be examined in context to the existence of the person concerned, the factum of actual money in possession of the person and having paid to the assessee and the mode of payment. Thereafter, if the person concerned is in existence and has actually paid the amount from his account by cheque, it can be said that the initial burden is discharged so far as explanation to be considered under section 68 of the Act. Thereafter, the burden would be upon the revenue to show that either the person was bogus or there was no financial capacity to make the payment and the arrangement of money was artificial or that the money has not passed over and it was only by way of an eye wash. Such could be proved by the Revenue in the present case through the statement of the persons, but unfortunately, they were not made available for cross-examination and therefore, the statements could be used as an evidence against the assessee. No other evidence was available with the Revenue. 7. Under these circumsta....